USDA-backed projects to provide ‘foundation’ for carbon markets?

Concerned with greenhouse gas emissions and intended to provide a solid foundation for carbon-trading markets, the USDA has announced it will fund a set of farm, ranch and forestry projects across the United States. The $17 million in grants is also expected to help finally nail down verification/quantification of carbon credits.

This will not be the first attempt to make sure carbon sequestration claims are legitimate – something a transparent market requires. In recent years, both private and federal players have had a go at measuring and standardizing carbon credits. Previous attempts to set baselines and build carbon-trading markets have resulted in mixed success.

For example, in 2007, a proposal known as the “Duke standard” was floated. At the time, Dick Wittman, an Idaho farmer and former president of the Pacific Northwest Direct Seed Association said, “Today's carbon market is like the Wild West — anything goes in terms of measurement and verification standards. … There is a ‘buyer beware atmosphere’ out there that makes it difficult to distinguish really good agriculture projects that reduce significant greenhouse gases from those that don't. Businesses won't have confidence their emissions are being offset until there is a standard measurement and verification protocol.”

Four years later, carbon verification standards are still not set in stone. Agriculture Secretary Tom Vilsack has made it clear the Obama administration wants that remedied.

Towards that end and to promote innovation,last December the USDA announced “it would make resources available through an innovative grant project … for large-scale demonstrations of greenhouse gas mitigation practices on private lands,” said Vilsack during a Wednesday morning press conference. “We were hopeful the announcement would trigger a number of opportunities for farmers, ranchers and forest owners to show us how they could creatively reduce greenhouse gas emissions, increase sequestration and also improve their bottom line. We were also hopeful the effort would lead to leveraging of private sector demand for these services through emerging environmental markets. And we were hopeful this would create opportunities for better collaboration between (USDA) and the various states that are establishing markets and that this would assist (USDA) in building the capacity to understand how these markets work and how to do more of this in the future.”

Interest proved high, with the USDA receiving 43 project proposals from 28 states. All proposals met the basic eligibility criteria and were evaluated by technical experts.

“So, today, we’re announcing the awarding of more than $17 million for GHG reduction projects in 24 states through the Conservation Innovation Grants Program” a competitive grant program administered by the Natural Resource Conservation Service (NRCS).

In addition, Vilsack said the NRCS is providing up to $10 million in its Environmental Quality Incentives Program (EQIP) to provide eligible producers additional resources to implement conservation practices.

California/Arkansas rice

Of special interest to Mid-South and California rice growers will be a $1.089 million grant to the Environmental Defense Fund (EDF) to “develop and implement a first-of-its-kind initiative to demonstrate reductions in greenhouse gas emissions in rice production.”

Dave White, NRCS chief – also participating in the press conference -- said the EDF will begin rice pilot projects under California protocols before moving to the Mid-South. “They’ll have their offsets verified by three different registries and sold under” California’s AB 32 laws, which target global warming.

“Once they figure that out, they’ll try to transfer that information to rice producers in Mid-South. So, we’ll see a whole variety of things happening with models, protocols and nitrous oxide and carbon credits.”

Why start in California rice instead of the Mid-South?

“California works under a whole different world as far as a regulatory regime,” said White.“They’ll look at rice practices such as baling of rice straw, dry-seeding, overwintering of water. I think what they’ll try to do is trade a menu of options for rice producers, get that into a model and have it verified.

“In California, they will have a market. But at some point, this will help us get ready for (carbon trading) markets as they emerge across the country.”

Backing up White, Vilsack said “this is an important point: Some of these projects will key into markets already existing and provide additional ways of determining what could be effective in those existing markets. But many of these projects are better designed for us to determine how we could set markets up and what we’d be able to do effectively and efficiently to promote more successful markets. So, it’s a combination of keying into existing markets but also creating a foundation for new markets.”

More projects

Other approved projects announced Wednesday:

Adaptation of a Forest Carbon Protocol to Include Tribal Lands (Washington) – $1.226 million to the Confederated Tribes of the Colville Indian Reservation to adapt and implement forest carbon sequestering practices and to develop protocols that overcome the legal and technical barriers faced by tribes in entering carbon credit trading markets.

Agricultural Soil Carbon: Developing a Large-scale Agricultural Soil Carbon Transaction in the Palouse Region(Idaho, Oregon, Washington) – $550,000 to Applied Ecological Services, Inc., to work with landowners to provide a roadmap for monetizing or determining a value for carbon credits arising from soil carbon enhancing conservation practices such as no-till and crop rotation on 1 million acres across the Palouse ecoregion.

Bringing Greenhouse Gas Benefits to Market: Nutrient Management for Nitrous Oxide Reductions (Illinois, Michigan, Oklahoma) – $400,000 to the Delta Institute and its partners to create a system that allows producers to earn greenhouse gas credits for their nutrient management and conservation practices on at least 60,000 acres.

Dairy Farm Stewardship Toolkit (California, Florida, Idaho, Michigan, Minnesota, New Mexico, New York, Oregon, Pennsylvania, Texas, Washington, Wisconsin) – $1.102 million to the Dairy Science Institute, Inc., to work with dairy farmers across 12 states to develop a decision support tool that helps those farmers enhance their conservation efforts to reduce greenhouse gases.

Ducks Unlimited Avoided Grassland Conversion Carbon Project(North Dakota, South Dakota) – $161,000 to Ducks Unlimited, Inc., to develop tools for grassland producers to help them monetize or determine a value for the carbon storage benefit of retaining rangeland that may otherwise be converted to cropland on 10,000 acres in North Dakota and 15,000 acres in South Dakota.

Estimating Nitrous Oxide Reductions from Nutrient Management in the Chesapeake Bay Watershed(Maryland, Virginia) – $455,000 to the Chesapeake Bay Foundation to develop a tool for estimating Nitrous Oxide reduction from nutrient management in the Chesapeake Bay watershed, and to reduce technological and financial barriers to certifying carbon offset credits generated by nutrient management.

“All of this is designed to give us a better sense of what works and how we can develop these environmental markets over time,” said Vilsack. “It produces a new income opportunity for farmers, ranchers and forested landowners. It creates better environmental benefits.”

Other issues

The program is “primarily designed to begin to test-market certain ideas and concepts,” said Vilsack. “It allows us to refine our measuring processes and how markets could be assisted. Most of these are strategies for various types of production processes. This is foundational work being done.

“But we’re excited about the breadth of the foundation work involving a multitude of crops (and) the livestock industry in an aggressive way. We’re really interested in the fertilizer piece of this, as well.”

Vilsack was asked how a constrained federal budget figured into the process. He returned to the theme of “creating a foundation” so “as we do conservation to the extent we do a better job of modeling, measuring, quantifying the results of certain conservation programs and techniques – and suites of conservation practices – we’ll do a better job of potentially attracting private sector investment. … In turn, (that) will result in leveraging the federal dollars more effectively than we have in the past.”

As for how much private funding is being put into the projects, White saidthe “nine grants amount to $7.4 million. … That requires at least a 50 percent non-federal match. So, the $7.4 million in federal funds will be matched by another $7.4 million for roughly $14.8 million.

“The other $10 million we’re making available is through EQIP. That is to help implement the practices the various projects may develop. (EQIP) is a cost-share program … generally the cost-share ranges from 50 to 75 percent. So, (for the EQIP part of the effort) another $5 million, or so, will be farmer-leveraged funds.”